Bankruptcy protection sought by Dodgers: Will it affect ownership of the team?
McCourt will now ask the bankruptcy court to approve a deal already rejected by MLB last week – a $3 billion media rights transfer between the Dodgers and Fox.
“The deal with Fox demonstrates that the Dodgers have enormous value which substantially exceeds the team’s current and future liabilities,” says Bruce Bennett, the Dodger’s bankruptcy counsel from Dewey & LeBoeuf in Los Angeles.
One of the key hurdles for McCourt to succeed is to get a court to basically suspend MLB’s by-laws, which give it enormous power over who owns a franchise and how they run it.
This is not the first time an embattled sports owner has gone to bankruptcy court, points out Mr. Feder. Last year the Texas Rangers baseball franchise, which had a very heavy debt load, went into bankruptcy. After heated negotiations with MLB they ended up putting the team up for auction.
“The auction was highly compressed over several weeks when normally it would be several months,” says Feder. He says the speed of the auction, which was won by the Nolan Ryan group favored by MLB, meant some of the legal issues were never squarely addressed.